11. For most products, higherprices result in a decreased demand, whereas lower

Question

11. For most products, higherprices result in a decreased demand,
whereas lower prices result in an increased demand. Let

D= annual demand for a product in units

P= price per unit

Assume that a firm accepts the following price demand relationshipas
being realistic:

D= 800-10p

Where p must be between $20 and $70

a. How many units can the firm sell at the $20 per unit price? At the$70
per unit price?

b. Show the mathematical model for the total revenue (TR), which isthe
annual demand multiplied by the unit price.

c. Based on other considerations, the firm

Explanation / Answer

D=800-10p for p=20 D=unit sold = 600 . for p=70 D=unit sold =800-10*70 =100 . b)TR =D*p =(800-10p)*p =800p-10p^2 c) for p=30 ..TR =15000 for p=40 ..TR =16000 for p=50..TR =15000 hence P =40 is recomanded d) and D=800-10p hence for p =40 D =400

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